For millions of Americans, Social Security is a key part of their retirement income. About 40% of people aged 65 and older rely on Social Security for at least half of their income. But depending on where you live, the amount you get to keep from your benefits can change due to state taxes.
The good news for retirees is that most U.S. states do not tax Social Security income at all. In 2025, that number will grow even more thanks to new tax laws passed in Kansas, Missouri, and Nebraska. These changes will allow retirees to hold onto more of their money at a time when every dollar counts.
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More States Stop Taxing Social Security
While the federal government may tax up to 85% of your Social Security benefits depending on your income, state tax laws are different. Some states used to tax Social Security benefits just like regular income. But in recent years, many have removed these taxes to give retirees a break.
In 2025, a total of 41 states plus Washington, D.C., will not tax Social Security benefits at all. This is a major change from the past and helps retirees keep more of their monthly check.
New Changes for 2025
Three states, Kansas, Missouri, and Nebraska, have all passed laws to stop taxing Social Security benefits starting in the 2024 tax year. That means by 2025, retirees in those states will not owe any state tax on their benefits.
- In Kansas, the state now exempts all Social Security income from taxes, regardless of how much money a person earns.
- Missouri removed the tax for all residents aged 62 and older, regardless of income.
- Nebraska had already started phasing out the tax, but has now fully eliminated it.
These changes mean that people retiring in these states will see more money stay in their pockets every year.
States That Still Tax Social Security
Only nine states will still tax Social Security benefits in 2025. These are:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia (which plans to stop by 2026)
In some of these states, people may not have to pay the full tax if they meet certain age or income limits. For example, Colorado lets people aged 65 and older fully deduct Social Security income, and in 2025, this will also apply to those aged 55 to 64 if they earn under a certain amount.
List of States That Don’t Tax Social Security in 2025
Here are the 41 states and Washington, D.C., that will not tax Social Security benefits:
Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming, and Washington, D.C.
How Much Can You Save?
Retirees can save a lot just by living in states that don’t tax Social Security. For example, if someone receives $30,000 in Social Security benefits and lives in a state with a 5% tax rate, not having to pay that tax could mean saving $1,500 each year.
In Missouri, the total savings for all retirees could be about $309 million a year. In Nebraska, that number is around $17 million. These changes show how state tax laws can make a big difference for retirees living on a fixed income.